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MONTH-IN-BRIEF (Apr 2018)

Corporate Law

Kentucky, and Not Federal, Court to Hear Dissenter Rights Action

By Thomas E. Rutledge, Stoll Keenon Ogden PLLC

A recent decision from the federal district court held that, on the basis of “Burford Abstention,” an action arising under the dissenter rights statute should be heard in state, not federal, court. Henley Mining, Inc. v. Parton, Civ. No. 6:17-CV-00092-GFVT, 2018 WL 1526081 (E. D. Ky March 28, 2018).

In connection with the merger of several companies in which he was a shareholder, David Parton exercised dissenter rights in accordance with the dissenter-rights provisions of the Kentucky Business Corporation Act. The successor corporation paid to Parton what it thought was the amount due; Parton disagreed with that amount. In response thereto, and again consistent with the Kentucky Business Corporation Act, the corporation filed a complaint with the court seeking a determination of the fair value of Parton’s interest. This suit was filed in federal court on the basis of diversity jurisdiction, Parton being a citizen of Virginia while Henley Mining, the successor corporation, was incorporated (and presumably has its principal place of business) in Kentucky.